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Suzlon seeks fresh loans to avoid FCCBs default

According to reports, loss-making  Suzlon Energy, which urgently needs to repay $569 million to bondholders by October, has begun talks with key banks for raising money amidst signs of wariness among some lenders.

People close to the development said that Suzlon is believed to sounded out some banks, such as  SBI,  Bank of India,  Bank of Baroda,  Central Bank,  Canara Bank and IDBI, for a term loan of $700 million in FY13. Many of these banks were part of a consortium which refinanced Suzlon’s $2.4-billion debt in 2010.

The  wind energy firm needs to repay $569 million, and domestic banks are the last resort after attempts to raise funds by selling assets and recovering dues from its client  Edison Mission failed to work out.

Persuading bondholders to roll over their debt still remains an option but will be very difficult to implement considering the paucity of time and certain opposition from many bondholders.

The company has sought investment banking firm Macquarie’s help to explore this possibility but people close to the development say that it is unlikely now.

“The large and small bondholders we are in touch with are not interested in restructuring. It is already April and we are concerned about our repayments,” a foreign banker with clients holding Suzlon’s  FCCB told ET.

The problem for Suzlon is that its debt of 11,790 crore is already very high and banks may baulk at providing new loans.

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